Case Note & Summary
The appeal was filed by a suspended director of ASB Energy Systems and Construction Pvt. Ltd. against an order from the National Company Law Tribunal admitting a Section 9 application by Daga Power Systems & Engineers Pvt. Ltd., the operational creditor. The dispute arose from a Joint Venture Agreement between the corporate debtor and the operational creditor for a project with the Orissa Power Transmission Corporation Ltd. (OPTCL). The corporate debtor was the lead partner in the consortium and had obligations to pay the operational creditor for supplies made. The operational creditor claimed outstanding payments amounting to ₹ 4.28 crore, asserting that the corporate debtor had acknowledged a liability of ₹ 1.52 crore. The adjudicating authority found that the operational debt was established through invoices and acknowledgment of liability. The appellant contended that the operational creditor was not a supplier but a co-venturer, arguing that the claim was barred under Section 10A of the Insolvency and Bankruptcy Code due to invoices dated within the specified period. The court analyzed the agreements and found that the operational creditor had a clear obligation to supply materials, and the corporate debtor was responsible for payment after receiving funds from OPTCL. The court held that the operational creditor's claim constituted an operational debt, and the application was not barred by Section 10A as the date of default was after the specified period. The appeal was dismissed, upholding the admission of the Section 9 application.
Headnote
A) Insolvency and Bankruptcy - Operational Debt - Existence of Debt - Insolvency and Bankruptcy Code, 2016, Section 9 - The adjudicating authority admitted the Section 9 application, establishing the operational debt based on acknowledgment of liability by the corporate debtor and invoices raised. The court held that the existence of debt and default was sufficiently proven, and the operational creditor's claim was valid (Paras 8-12). B) Joint Venture Agreements - Nature of Relationship - Insolvency and Bankruptcy Code, 2016, Section 9 - The court clarified that the relationship between the operational creditor and corporate debtor was governed by a Joint Venture Agreement, which included obligations for supply and payment, thus qualifying the claim as operational debt. The court distinguished this case from previous judgments where profit-sharing agreements were involved (Paras 19-21). C) Section 10A Bar - Applicability - Insolvency and Bankruptcy Code, 2016, Section 10A - The court found that the claim was not barred under Section 10A as the date of default was after the specified period, and the invoices in question were not part of the barred period. The court held that the application was maintainable (Paras 22-23).
Issue of Consideration
Whether the operational creditor's claim constituted an operational debt under the Insolvency and Bankruptcy Code, 2016.
Final Decision
The court upheld the admission of the Section 9 application and allowed for potential settlement under Section 12A, but did not dismiss the appeal outright. It found that the operational creditor's claim constituted an operational debt and was not barred by Section 10A.
Law Points
- Insolvency and Bankruptcy
- Operational Debt
- Joint Venture Agreements
- Acknowledgment of Liability
- Section 9 Application
- Section 10A Bar
